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Solving the risks defining insurance are pivotal in the fight against financial crime
Traditionally seen as less exposed than banking, insurers and reinsurers now face increasing pressure from regulators, evolving fraud tactics, and the urgent need to modernize compliance frameworks.
During our recent webinar, “Regulators, Risk & Reinsurers: AML’s New Frontier”, I had the pleasure of moderating a discussion with two highly respected leaders in financial crime prevention:
- Martina Cont, Head of Processes & Operations, Generali Group
- Dr. Mario Menz, Deputy Chair, Institute of Money Laundering Prevention Officers
Together, we examined the operational, regulatory, and technological challenges shaping anti-financial crime (AFC) in the insurance and reinsurance markets, and explored strategies for building more resilient frameworks for the future.
Fraud, sanctions and bribery: The risks defining insurance
While money laundering is a recognized concern, our panel highlighted that fraud, sanctions, and bribery/corruption risks often pose even greater challenges for insurers and reinsurers.
“The biggest risk the industry faces is still fraud. One in every 100 insurance claims is fraudulent and that impacts all of us, from higher premiums to slower payouts.” – Dr. Mario Menz
Fraudulent claims, averaging between £10,000–15,000 each, not only harm insurers but also burden policyholders through higher premiums and delayed claims processing. At the same time, sanctions – particularly following the conflict between Russia and Ukraine – have placed insurers under heavy scrutiny, forcing firms to rapidly strengthen monitoring capabilities.
Perhaps most concerning is the recurring theme of weak customer due diligence (CDD). The impact of the UK FCA’s £7.8m fine against JLT Specialty Limited (JLTSL) underscores how poor oversight of introducers, inadequate onboarding checks, and weak commission payment controls can leave insurers exposed to significant penalties and reputational damage.
The complexity of global insurance operations was a recurring theme throughout the session. Insurance groups often operate across multiple jurisdictions, each with unique governance structures and regulatory requirements. This diversity, Martina noted, creates blind spots for compliance teams, particularly in distribution models reliant on brokers and intermediaries.
“Regulators are no longer just asking what controls we have in place. They want to know how effective those controls are. It’s a clear shift toward outcome-based supervision.” – Martina Cont
This shift demands that compliance teams go beyond ‘box ticking’. Broad regulatory requirements must translate into practical, operational risk controls tailored to specific business lines. Achieving this requires collaboration, not only between compliance and business operations, but also across institutions through knowledge sharing and collective best practices.
Outcome-based supervision means insurers/reinsurers must demonstrate that their controls actually work – not just that they exist. Internal quality assurance, ongoing monitoring, and transparent reporting are no longer optional, they are essential.
Technology as a game-changer
When asked about the role of technology, both panellists agreed: AI and automation are no longer ‘nice-to-haves’ but are critical tools in modern compliance.
“AI isn’t the future anymore – it’s the present. Insurers are already using it to identify red flags and risk triggers in ways we couldn’t before.” – Dr. Mario Menz
Some standout examples shared during the discussion included:
- Machine learning in name screening: Generali has successfully used historical data to recalibrate its screening tools, reducing false positives by over 20%. This efficiency gain frees staff to focus on genuine risks while maintaining compliance integrity.
- Sanctions evasion detection: AI-driven maritime monitoring now enables insurers to detect red flags such as ships making unauthorized stops, changing identifiers, or attempting to conceal cargo activity, all of which can indicate sanctions breaches.
- Automation for efficiency: By automating routine alert reviews and embedding controls into workflows, insurers can reduce manual workloads, improve accuracy, and ensure human expertise is reserved for complex, high-risk cases.
Martina emphasised, however, that AI is not a silver bullet. Strong governance frameworks, audit logs, explainability, and human oversight remain critical to ensure technology enhances – not undermines – compliance outcomes.
The challenge of KYC: From checkbox to risk asset
Our conversation also touched on KYC processes. While KYC is often treated as a compliance checkbox, Martina urged insurers to see it as a strategic risk management asset.
“KYC is not just a compliance obligation—it’s a risk management asset. Used properly, it strengthens both compliance and the business.” – Martina Cont
The key challenge? Bridging the gap between written policies and real-world execution. Without the right tools and training, requirements often fail to translate into consistent day-to-day action. The solution lies in:
- Embedding controls into digital workflows to reduce human error
- Strengthening frontline training to improve compliance culture
- Using automation to handle routine checks while empowering humans to make judgment-based decisions.
Future-proofing AFC in insurance
Looking ahead, our panelists agreed that the AFC risks themselves — fraud, sanctions, bribery, money laundering — aren’t going away. But the way insurers respond must evolve.
Mario warned of the growing threats from synthetic identities and deepfakes as digitalisation accelerates, particularly in retail insurance. Martina emphasized the need for flexibility and continuous adaptation:
“We will never be perfectly prepared for every risk—but we can always be prepared to act. Flexibility is the key.” – Martina Cont
Both agreed that insurers must:
- Stay aligned with evolving regulatory expectations, including the new EU Anti-Money Laundering Authority (AMLA)
- Invest in technology while maintaining strong governance and human oversight
- Collaborate across institutions to share best practices and strengthen the industry as a whole
Conclusion
The risks defining insurance and reinsurance sectors are ones that they cannot ignore, whether it’s fraud, sanctions, or actions related to bribery. Regulators are demanding evidence of effectiveness, not just compliance on paper. And technology, especially AI and automation, offers unprecedented opportunities to strengthen controls, but only if paired with strong governance and collaboration.
Tthe future of AFC in insurance will be shaped not by the risks themselves, but by how effectively we respond – with innovation, technology readiness, agility, and a collaborative mindset.
If you missed the live discussion, you can catch the full webinar on demand now.
Related resources
Compliance myth-busters: AML insurance—still low risk?
AML compliance designed for insurance
Watch ‘Regulators, risk & reinsurers: AML’s new frontier’
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